Digital technology and value relevance of accounting earnings of money deposit banks in Nigeria

Abstract

This paper evaluates how the value relevance of accounting earnings of the listed money deposit banks in Nigeria have been influenced by the adoption of selected digital technologies of mobile banking transactions, automated teller machines (ATM), and point-of-sale (POS) transactions. With the rising trend of the use of digital technologies, the banking practices, as well as financial reporting practices in Nigeria, have greatly changed. Our study will be completed in the 2012Q1 2023Q4 time frame and will make use of secondary data provided by the Central Bank of Nigeria. The study relies on the heterogeneous analytical framework, which is anchored on the diffusion theory of innovation, transaction cost theory and technology acceptance model to explain the variations in the effects of channels of digital banking on the performance level of various levels. As preliminary analysis, descriptive statistics and Spearman rank-order correlation analysis are utilized, and then, econometric estimation is conducted to investigate the association between digital technologies and the market value of equity as an indicator of earnings value relevance. The results indicate that ATM, mobile banking, and POS transactions have high positive correlations with the value relevance of accounting earnings, which implies that the presence of higher digital transactions increases the informativeness and credibility of earnings reported by commercial banks. The research finds that digital technologies are very important in enhancing the connection between accounting profits and market values, which positively impact the quality of financial reporting and investor trust in the Nigerian banking industry.

Keywords: Digital Technologies, Value Relevance, Accounting Earnings, Mobile Banking Transactions, ATM, POS.